Public/private mix in pensions in Europe The role of state, market and social partners in supplementary pensions
In the last two decades, pensions policy has undergone numerous innovations across Europe and the changes have been characterised by common trends. These include cost-containment measures under the public pillar; increased attention to the regulation of supplementary pension schemes; the revision of tax policy; and the introduction of new forms of governance of public and nonpublic pillars. In many European countries reforms have thus led to increased complexity of pension systems, insofar as they now typically entail parallel action of the first public pillar and supplementary pension funds.
Accordingly, it would seem urgent to redirect the interest of pensions policy scholars and stakeholders from the predominant past focus on public pension schemes to a more balanced focus on first-, second- and third-pillar schemes. Any reflection upon the future of pensions policy in Europe must start out from an understanding of its current and future operation under different pillars. Such a revised analytical focus may contribute to tackling the following policy challenges: defining a coherent framework for the governance of the more complex pension systems; implementing new forms of solidarity and redistribution through the first, second and third pillars; using old (contribution, benefit formulae) and new (taxation, monitoring, regulation) policy tools to define and implement broad pension policy strategies.
This paper focuses on two policy-relevant research questions. First of all, what are the key institutional and policy features of the reformed pension systems in Europe? In answering this research question we set out to assess the place of the different pillars and the key elements of their operation in European countries. Secondly, what are the key policy tools that policymakers (and stakeholders) may use for steering pensions policy? Complex governance mechanisms will be summarised in order to offer a broad overview of the interplay between state, market and social partners, as well as of the governance tools that may be activated for the purpose of achieving a revised pensions policy strategy.
Section one refers to the European pension models characteristic of the 21st century. The aim here is to shed light on the outcome of recent reforms (largely characterised by the increased role of supplementary schemes in providing oldage protection). Section two analyses the main present and future challenges to the financial sustainability and social adequacy of pension systems in Europe. Both are increasingly shaped by the performance of supplementary pension funds. Section three introduces some of the key analytical dimensions of the interplay between state, market forces and social partners. Sections four and five provide evidence of the role of the state and social partners in the governance of supplementary schemes. This role is consistent with opportunities to deal with the above-mentioned problems of sustainability and adequacy, as well as risks of governance inefficiency. Section six concludes with a list of issues for the future of pensions policy that are that are of key importance for both analysts and stakeholders.